Who is responsible for transactions that are charged back, including all related amounts, for a Crowne Plaza franchise?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
7 Chargebacks
7.1 Chargebacks Generally. You must reimburse us for all transactions you submit that are charged back and all related amounts, including: (a) all Chargebacks; (b) all fees, fines, penalties, assessments, and other amounts related to disputing or arbitrating a Chargeback or failing to produce records within applicable time limits; and (c) all Chargeback Fees set forth on the Fee Schedule or elsewhere in the Agreement, regardless of whether a Chargeback is settled in your favor or the Cardholder's favor.
7.2 Disputing Chargebacks. You may dispute a Chargeback as provided in the Card Organization Rules, including any requirements for timely submission.
Our obligation to you respecting Chargeback disputes is limited to presenting your dispute to the appropriate Card Organization, to the limited extent required by Card Organization Rules.
We will not engage in direct collection efforts against Cardholders on your behalf.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza FDD, the franchisee is responsible for reimbursing the franchisor for all transactions that are charged back. This includes the chargebacks themselves, all related fees, fines, penalties, assessments, and other amounts related to disputing or arbitrating a chargeback, or failing to produce records within the required time limits. This also includes all chargeback fees outlined in the fee schedule or elsewhere in the agreement, regardless of whether the chargeback is settled in the franchisee's favor or the cardholder's favor.
This means that if a customer disputes a charge at a Crowne Plaza hotel and the chargeback is validated, the franchisee will have to cover the cost of the original transaction, as well as any additional fees or penalties associated with the chargeback process. While the franchisee has the right to dispute the chargeback according to card organization rules, Crowne Plaza's obligation is limited to presenting the dispute to the appropriate card organization.
Furthermore, the FDD states that Crowne Plaza will not engage in direct collection efforts against cardholders on behalf of the franchisee. Franchisees are also responsible for excessive chargeback fees if their chargeback percentage exceeds the estimated industry chargeback percentage for their line of business. This percentage is subject to change by Crowne Plaza to reflect changes reported by Visa, Mastercard, or Discover.
It is important for a prospective Crowne Plaza franchisee to understand these chargeback responsibilities, as they can significantly impact profitability. Franchisees should implement robust procedures to minimize chargebacks, such as verifying cardholder information, obtaining proper authorizations, and providing excellent customer service. Additionally, franchisees should carefully review their statements and reports for any discrepancies or errors related to card transactions and chargebacks, notifying the franchisor in writing within 90 days of the statement date to avoid potential loss of recourse.